West Coast energy wholesaler Calpine has hundreds of millions of dollars in geothermal investment tied up in green energy that it may not be able to sell.

NEW YORK (TheStreet) -- Shrinking the options for green energy is probably not what the leaders of the State of California have in mind. But that may be what's happening.

According to energy giant Calpine (CPN), hundreds of millions of dollars in historically profitable geothermal energy investments at its famed Geysers facilities may be at risk as California utilities marginalize geothermal power in favor of other renewables, like wind and solar.

As the state's renewable energy mandate expands, utilities are not being required to contract for geothermal power and, according to the company, are instead choosing wind and solar. Geothermal has been an established energy source for 100 years and while maintenance of its wells, plants and infrastructure carries considerable expense, it is a proven technology and a constant source of power that is already embedded in the local economy.

"We're really a large participant in the community," Calpine's vice president for the geothermal region, Michael Rogers, told TheStreet in a video interview Friday. The company provides "nearly 500 full-time, high-paying jobs" plus tens of millions of dollars in royalties, taxes and maintenance that benefits the local economy, he added.

Wind and solar are subsidized energy sources, making it more difficult to compete against them in price. Rogers said. Calpine also claims the true costs of integrating solar and wind into the existing energy grid are not being factored into utilities' decisions.

"The subsidies for the other energy sources as well as the lack of inclusion of integration costs really puts us at something of a competitive disadvantage," Rogers said.

Terri Prosper, a spokesperson for the California Public Utilties Commission, said the issue is not an attempt to quash geothermal but is more about trying to grow the state's green energy supply, an effort guided by the "renewable portfolio standards" or RPS.

"A large increase in solar and wind resources is necessary to meet the 33 percent RPS mandate as the undeveloped potential for both resources in California is far greater than the untapped potential for geothermal," Prosper said in an email. "Consequently, while the total megawatts of geothermal may not decline over time the growth in wind and solar mean geothermal' s percentage of total load will."

However Danielle Matthews Seperas, a spokesperson for Calpine, said that even existing contracts are at risk of non-renewal.

"The Geysers provides numerous environmental and economic benefits but despite those benefits and the state of California's continued support of strong environmental policies, the utilities are not being required to contract for more geothermal," Seperas said. "Without changes to existing policies, 55% or, 400 megawatts of the 725 megawatts of Calpine's Geysers power will be without a contract by the end of 2017."

In addition, the company has permits in hand to build two new plants -- the first since 1989 -- each capable of producing up to 49 MW of clean energy, enough to power more than 70,000 homes, according to company documents. Without power purchase agreements, those projects will not be built, Rogers said.

Small but Important

Only a small percentage of Calpine's power output is geothermal, but it is the largest of only a few players in the U.S. energy sector invested in the technology. Most of the company's 94 power plants burn natural gas, with only 15 geothermal turbine-based plants. The geothermal capacity of 725 MW is roughly 2.5% of the company's total capacity. Even so, the loss of contracts for that power would be significant to investors and to the community.